First council lines up to borrow from municipal bond agency

Cambridgeshire County Council has become the first local authority to approve the operating framework for the UK Municipal Bond Agency, meaning it could form part of the first bond issue.

The agency, which declared itself open for business last month, plans to sell bonds on the capital markets, raising funds that it will then lend to councils. Its framework agreement has been sent to local authorities for them to review the rules and processes that will govern borrowing from the agency.

Cambridgeshire approved the documentation at a budget meeting on Tuesday.

UKMBA chair Sir Merrick Cockell said the adoption of the framework by the first local authority was “an incredibly exciting development for local government finance”.

He added: “This reinforces that the UK Municipal Bond Agency is open for business and ready to go to the market once local authorities are ready to do so.”

Cambridgeshire leader Steve Count said that authority was “proud to be at the forefront of this ground breaking initiative”. He said it made sense for the authority to use the agency, which would reduce borrowing costs compared to the Public Works Loan Board, which in turn would mean the authority has more money to support its frontline services.

“The establishment of the UK Municipal Bonds Agency is a strong statement of local government standing on its own two feet,” Count added. “By acting together and using our collective strength, local authorities will be able to borrow cheaper, reduce intermediary costs and create a new market in UK municipal bonds.

“We very much encourage others to follow our lead and approve the necessary framework agreement that will allow them to become borrowers from the agency.”

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